Prime Minister Narendra Modi on Wednesday squarely blamed the erstwhile UPA regime for the whopping Rs 8 lakh crore bad loans burden plaguing the banking system, saying banks were pressured to give loans running into thousands of crores of rupees to select industrialists in a scam that was even bigger than 2G, coal and Commonwealth Games scams.

Speaking at the 90th AGM of apex business chamber Ficci, he said the UPA government had completely spoilt the banking system of the country. The biggest liability passed on by the previous government was the non-performing assets (NPA), he added. Modi said loans extended to select industrialists by pressuring banks was a loot of public money.

Calling it a "scam", he said this was bigger than the Commonwealth Games, 2G telecom spectrum allocation and coal block allocation scams. The Prime Minister also allayed the fears of bank account holders, saying their deposits in banks will be safe and their interests would not be harmed in any way. He said rumours were being spread by some sections about provisions of the proposed Financial Regulation and Deposit Insurance (FRDI) Bill under which the depositors would suffer.

"The government is trying to strengthen the banking system by policy initiatives on a daily basis. But on social media rumours are being spread about the FRDI Bill, which is completely opposite to the reality. We are trying to protect the depositors interest and the banks as well," the PM said.

He was apparently referring to the controversy over a bailin provision in the FRDI Bill. Social media posts have been alleging the clause would allow a major portion of deposits of account holders to be forfeited in case of a crisis in a financial institution. Modi also said his government is formulating policies keeping in mind the need of businesses, abolishing archaic and obsolete laws.

Industry, he said, had been long demanding Goods and Services Tax (GST) and the BJP-led government implemented it and introduced measures like anti-profiteering to see that industry passes on the benefit of lower taxes to the people. The PM also urged Ficci to handhold small enterprises and make efforts to ensure that the dues owed to them by big companies are cleared expeditiously. He asked it to play the role of a think-tank for the Micro, Small and Medium Enterprises (MSME) sector.

Addressing industry captains, he exhorted them to pledge to the creation of a New India that fulfils the aspirations of the poor and the needy, gives fillip to domestic industry and where MSMEs are hand-held by large corporate to serve the requirements of the people in every nook and corner of the country.

Modi said Ficci has a role in making the Goods and Services Tax (GST) more effective and the more formal the system becomes, the more it will benefit the poor. He said that Ficci must voice concerns, when necessary, on issues such as builders exploiting the common man.